Costa Rica is world's greenest, happiest country

Latin American nation tops index ranking countries by ecological footprint and happiness of their citizens

A rainbow over San Jose in Costa Rica. Photograph: Juan Carlos Ulate/Reuters

Costa Rica is the greenest and happiest country in the world, according to a new list that ranks nations by combining measures of their ecological footprint with the happiness of their citizens.

Britain is only halfway up the Happy Planet Index (HPI), calculated by the New Economics Foundation (NEF), in 74th place of 143 nations surveyed. The United States features in the 114th slot in the table. The top 10 is dominated by countries from Latin America, while African countries bulk out the bottom of the table.

The HPI measures how much of the Earth's resources nations use and how long and happy a life their citizens enjoy as a result. First calculated in 2006, the second edition adds data on almost all the world's countries and now covers 99% of the world's population.

NEF says the HPI is a much better way of looking the success of countries than through standard measures of economic growth. The HPI shows, for example, that fast-growing economies such as the US, China and India were all greener and happier 20 years ago than they are today.

"The HPI suggests that the path we have been following is, without exception, unable to deliver all three goals: high life satisfaction, high life expectancy and 'one-planet living'," says Saamah Abdallah, NEF researcher and the report's lead author. "Instead we need a new development model that delivers good lives that don't cost the Earth for all."

Costa Ricans top the list because they report the highest life satisfaction in the world, they live slightly longer than Americans, yet have an ecological footprint that is less than a quarter the size. The country only narrowly fails to achieve the goal of what NEF calls "one-planet living": consuming its fair share of the Earth's natural resources.

The report says the differences between nations show that it is possible to live long, happy lives with much smaller ecological footprints than the highest-consuming nations.

The new HPI also provides the first ever analysis of trends over time for what are supposedly the world's most developed nations, the Organisation for Economic Cooperation and Development (OECD).

OECD nations' HPI scores plummeted between 1960 and the late 1970s. Although there have been some gains since then, HPI scores were still higher in 1961 than in 2005.

Life satisfaction and life expectancy combined have increased 15% over the 45-year period for those living in the rich nations, but it has come at the cost of a 72% rise in their ecological footprint. And the three largest countries in the world – China, India and the US, which are aggressively pursuing growth-based development models – have all seen their HPI scores drop in that time.

The highest placed western nation is the Netherlands. People there live on average over a year longer than people in the US, and have similar levels of life satisfaction – yet their per capita ecological footprint is less than half the size. The Netherlands is therefore over twice as environmentally efficient at achieving good lives as the US, Nef says.

The report sets out a "Happy Planet Charter" calling for an unprecedented collective global effort to develop a "new narrative" of human progress, encourage good lives that don't cost the earth, and to reduce consumption in the highest-consuming nations – which it says is the biggest barrier to sustainable wellbeing.